Netflix and Warner Bros. to test video-on-demand

Warner Bros. plans to license some of its library for a test run of Netflix's …

Netflix will be getting an assist from Warner Bros., as the movie studio will license some of its movies for a test run of the DVD-rental company's movie-download service. Households with broadband would be able to rent and download films via Netflix and store them on a TiVo until they are viewed. Earlier this month, we reported that Netflix and TiVo were planning to partner in a video-on-demand service, and the decision by Warner Bros. to support a trial run means that an official announcement is likely imminent.

The success of Netflix and TiVo's movies-on-demand service hinges on a couple of factors. First, they have to convince the studios to play along. It's a no-brainer that the eyes of the studios will be on Warner Bros. They want to ensure that any broadband movie download service has adequate security measures to prevent unauthorized copies from being made. This includes closing the "analog hole," where videos could be copied onto an analog device such as a VCR and then back into digital form for distribution. TiVo plans to use a solution from Macrovision (known also for their music DRM products) that would prevent analog copying while keeping the downloaded film from being viewed after a preset time period.

Even if Netflix and TiVo solve the DRM problem to the satisfaction of the studios, there is still the question of access. The movie download service would compete with the same cable companies that provide the broadband pipe needed to deliver the films, so there exists the possibility that they could choose to block it altogether. Also, how will the downloaded movies stack up in terms of quality? Will Netflix subscribers accustomed to DVD quality see a big difference with the downloaded films?

Both Netflix and TiVo need the movies-on-demand service to be successful. They are pioneers in their respective niches, and both companies are starting to see larger companies with big bankrolls entering their markets.